The consumer-price index fell a seasonally adjusted 0.2% in September, the second straight month of overall price declines, the Labor Department said. The monthly pace of inflation has been steadily falling since May, when renewed weakness in gas prices took hold. Prices were unchanged over the past year, but gasoline prices have fallen 29.6% during that time, the department said.

Besides cheaper gas, consumer prices have been held down by the strong dollar, which makes imports cheaper for Americans. Excluding the volatile food and energy categories, prices rose a relatively firm 0.2% in the month and a moderately healthy 1.9% over the past year.

Much of that core increase came from nonenergy services, which have been relatively unaffected by lower gas prices and cheaper imports. Services rose 2.7% over the past year, driven by a 3.2% increase in the cost of shelter. (…)

In a separate report, the Labor Department found Americans’ inflation-adjusted weekly wages fell 0.2% in September.

From a year earlier, real average weekly earnings are up 2.2%. The number of hours worked fell 0.3% over the month but were unchanged from a year ago.

Prices for goods less food & energy remained unchanged (-0.5% y/y) after dipping 0.1% for four straight months.

Don’t fret about rising core inflation

(…) As today’s Hot Chart shows, the increase in the annual core inflation rate is largely due to the owners equivalent rent which is being pumped up by high demand for rentals, something that won’t be curtailed by interest rate hikes. Excluding the owners equivalent rent, the annual core inflation is running close to its average of the last couple of years of just 1.4%. (NBF)

(…) Marketed as villas, the duplexes in the sprawling Shimao Noble Town aren’t quite complete and don’t have permits for sale. That makes them invisible to both national and local statisticians trying to get a handle on the size of China’s massive glut of empty and unfinished homes.

Already, according to official statistics, China’s inventory of unsold homes is equal, on a square-foot basis, to more than six Manhattans. The glut is a drag on the world’s No. 2 economy, which is poised to report its slowest annual growth in a quarter century. (…)

Noble Town illustrates how the glut is worse than official statistics show. One plot alone contains more than 100 nearly unfinished duplexes. While the developer has registered 3,700 villas and apartments for sale with the local authorities, its marketing materials show hundreds more are just in the planning stages. (…)

China’s housing inventory totaled 428.6 million square meters at the end of August, up 15.7% from a year earlier and near a high of 431.5 million square meters in April. (…)

August property sales rose 15.6% compared with a year earlier. Completed but unsold home floor space was up 15.7% in the first eight months of this year, lower than the 25.6% increase recorded for the whole of 2014.

Still, property investment for the first eight months of the year is up only 2.3%, the lowest year-to-date level in nearly seven years, amid worries about inventories. (…)

In an April study, the International Monetary Fund estimated China’s housing inventory at the end of 2013 was about three times that of national data.

It said that in mid-2014, national figures show about four months’ worth of sales in inventory while local data showed more than two years’ worth. (…)

CRIC, which uses local housing data, says it has 16.5 months’ worth of supply, down from the year-to-date high of 25.2 months in March. In China, fewer than 12 months of inventory is considered healthy, while more than 20 months is considered oversupplied. (…)

Nationally, existing home sales slipped 2.1 per cent last month compared with August, although sales were 0.7 per cent higher than September of last year. It was the second-best September home sales after 2009, the Canadian Real Estate Association said.

Over all, monthly sales are up for the first nine months of the year, with 2015 shaping up to be the strongest year for the housing market since 2007. The Teranet-National Bank house price index, which tracks prices in 11 markets across the country, rose 0.6 per cent in September, the ninth straight month of increase.

Average resale prices rose 7 per cent compared with a year earlier, the real estate association reported. Following a trend that has driven the market for the past year, most of the gains came from sales of expensive single-family homes in Greater Vancouver, where average prices were up nearly 14 per cent on an annual basis, and the Toronto region, where prices rose 10.5 per cent from last September. In both cities, prices of detached houses rose roughly twice as fast as prices for condos.

The market looks much different beyond Toronto and Vancouver. Excluding those two cities, average resale prices rose just 2.9 per cent across the country. (…)

In Calgary, existing home sales were down 34 per cent from last September, the steepest yearly decline of any major market. Prices were flat in Calgary, Edmonton and Saskatoon, while they dropped 4 per cent in Regina compared with the same time last year. (…)

EARNINGS WATCH

51 companies (16.7% of the S&P 500’s market cap) have reported. Earnings are beating by 2.9% while revenues have missed by -0.2%.

The beat rate is 67% on EPS ( 68% yesterday and 70% the previous day) and 37% on revenues (39% and 40%).

Expectations are for a decline in revenue, earnings, and EPS of -3.7%, -5.1%, and -4.0%. Ex- Energy, these would be +1.8%, +2.1%, and +3.3% (+1.8%, +1.9% and +3.2% yesterday). This excludes the likelihood of beats, which have been above 4% over the past three years.

Results from the Banks have been lackluster. With 50% of the group reported, earnings have largely met expectations with loan growth offset by modestly higher expenses and loan loss provisions. (RBC)

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